Higher education institutions are increasingly emulating research institutions and concentrate their financial rewards on research output (Melguizo/Strober 2007). We investigate whether faculty members strongly react to such financial rewards. We focus on monetary rewards originating from promotions. Based on economic theories we derive three hypotheses. We test them with data from 112 faculty member from the USA and 189 from Germany. Consistent with our
hypotheses we find that faculty members strongly behave like
economic theory suggests: they not only increase publications when monetary incentives are large but they also instantly cut them down as soon as monetary incentives are gone.